Algorand rebounds 10% – But can ALGO outrun rising profit-taking?

After a sustained decline to a low of $0.105, ALGO finally found support and reversed. The altcoin held $0.11 support, and climbed to $0.118, flipping both short-term and 100-day moving averages.

In fact, as of this writing, Algorand traded at $0.116, up 10.36% on the daily charts. Over the same period, the altcoin’s trading volume jumped 101% to $62 million, signaling increased market participation. 

Speculative demand sparks Algorand’s trend reversal.

After Algorand [ALGO] signaled a rebound from a $0.10 slip, speculators returned to the market and chased the rally.

According to Coinglass data, Derivatives Volume rose 21% to $89.5 million while Open Interest jumped 5% to $56.2 million. 

With OI and Derivatives Volume rising in tandem, it indicated increased participation and steady capital inflows. In fact, Algorand Futures Inflow rose to $24.18 million compared to $21.83 million in outflows. 

Meanwhile, the altcoin’s Long Short Ratio on Binance and OKX remained above 1, while the overall ratio was $0.94. 

The ratio suggested that traders on Binance and OKX were bullish and took long positions, anticipating further gains. However, the market is still experiencing increased demand for short positions. 

The mismatch suggested that investors have mixed sentiment, while some expect prices to rise, others eye another slip. 

Profit taking skyrockets, threatening the rally.

As expected, as Algorand recovered from the recent slip, traders who had purchased at lower prices rushed to cash out. According to Coinglass, Exchange deposits rose to $5.27 million while withdrawals dropped to $4.25 million. 

For that reason, Spot Netfow rose 854% to $1.02 million, suggesting exchanges saw more sellers than buyers. Often, such market behavior precedes stronger downside pressure, leading to lower prices. 

Can ALGO upside momentum hold?

Algorand rose significantly as speculative demand dominated the market, strengthening upside momentum.

As a result, the altcoin’s Relative Strength Index (RSI) made a bullish crossover and rose to 60. With the RSI hitting these levels, it suggests that buyers have taken control of the market.

Traditionally, sustained demand has preceded stronger upward momentum, resulting in larger gains. Given prevailing market conditions, ALGO is currently testing the 200 EMA at $0.12. 

If the momentum holds, the altcoin will successfully flip $0.12 and eye another move towards $0.13. However, profit takers are also very active and could derail all the gains.

Increased pressure from the group could see the altcoin drop below $0.11 again, towards $0.105.

Final Summary

• Algorand [ALGO] rose 10%, flipping the 100-day EMA, and surged to $0.118.  
• ALGO saw a trend reversal driven by increased speculation, but increased profit-taking threatens another slip.